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Commonly used auction terms |
AARE
(Accredited Auctioneer, Real Estate) |
The professional designation
awarded by the Auction Marketing Institute, Inc. to
qualified real estate auctioneers who meet the educational
and experiential requirements of the Institute and who
adhere to a strict code of ethics and standards of practice.
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Absentee Bid |
A procedure which allows a
bidder to participate in the bidding process without being
physically present. Generally, a bidder submits an offer on
an item prior to the auction. Absentee bids are usually
handled under an established set of guidelines by the
auctioneer or his representative. The particular rules and
procedures of absentee bids are unique to each auction
company.
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Absentee Bidder |
A person (or entity) who does
not attend the sale but submits, in advance, a written or
oral bid that is the top price he or she will pay for a
given property.
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Absolute Auction |
An auction where the property is
sold to the highest qualified bidder with no limiting
conditions or amount. The seller may not bid personally or
through an agent. Also known as an auction without reserve.
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Accounting of Sale |
A report issued to the seller by
the auctioneer detailing the financial aspects of the
auction.
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Advertising |
Non-personal, paid communication
such as newspaper, radio, direct mail and TV directed toward
the general public or, in some cases, specific prospective
client groups to provide information about the time, place,
contents, and arrangements of an auction.
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Agent |
A person who acts for or in the
place of another individual or entity by authority from
them.
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Appraisal |
The act or process of estimating
value.
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Apprentice Auctioneer |
An auctioneer who is in
training, operating under the supervision of a licensed or
experienced auctioneer.
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"As Is" |
Selling the property without
warranties as to the condition and/or the fitness of the
property for a particular use. Buyers are solely responsible
for examining and judging the property for their own
protection. Otherwise known as "As Is, Where Is" and "In its
Present Condition."
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Auction |
A method of selling real estate
in a public forum through open and competitive bidding. Also
referred to as: public auction, auction sale or sale.
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Auction Block |
The podium or raised platform
where the auctioneer stands while conducting the auction.
"Placing (an item) on the auction block" means to sell
something at auction.
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Auction Listing Agreement |
A contract executed by the
auctioneer and the seller which authorizes the auctioneer to
conduct the auction and sets out the terms of the agreement
and the rights and responsibilities of each party.
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Auction Marketer |
An individual who contracts with
sellers for the auction method of marketing property. In the
case of real property, he or she may not actually conduct
the sale
but is directly responsible for all aspects of marketing the
property.
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Auction Marketing |
The method of marketing real
property utilizing the auction method of sale.
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Auction Marketing Institute,
Inc. |
Founded in 1976, this
international association awards the professional
designations CAI and AARE to properly qualified auctioneers
through education, experience, and adherence to a strict
code of ethics and standards of practice. Formerly known as
the Certified Auctioneers Education Institute, Inc.
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Auction Plan |
The plan for pre-auction,
auction day and post auction activities.
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Auction Price |
The price of a property obtained
through the auction method of marketing.
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Auction Subject to Confirmation |
(See "Reserve Auction." )
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Auction Value |
The price which a particular
property brings in open competitive bidding at public
auction.
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Auction With Reserve |
An auction in which the seller
or his agent reserves the right to accept or decline any and
all bids. A minimum acceptable price may or may not be
disclosed and the seller reserves the right to accept or
decline any bid within a specified time.
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Auction Without Reserve |
See Absolute Auction.
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Auctioneer |
The person whom the seller
engages to direct, conduct, or be responsible for a sale by
auction. This person may or may not actually call or cry the
auction.
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Auctioneer Subcontractor |
An auctioneer hired by the
principal auctioneer.
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Ballroom Auction |
An auction of one or more
properties conducted in a meeting room facility.
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Bank Letter of Credit |
A letter from a bank certifying
that a named person is worthy of a given level of credit.
Often requested from prospective bidders or buyers who are
not paying with currency at auctions.
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Bid |
A prospective buyer's indication
or offer of a price he or she will pay to purchase property
at auction. Bids are usually in standardized increments
established by the auctioneer.
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Bid Acknowledgment |
A form executed by the high
bidder confirming and acknowledging the bidder's identify,
the bid price and the description of the property. Also
known as Memorandum.
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Bid Assistants |
Individuals who are positioned
throughout the attendees at the auction to assist the
auctioneer, spot bidders and assist prospective bidders with
information to help them in their buying decision. Also
known as ringmen, bid consultants, bid spotters, or
groundsmen.
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Bid Caller |
The person who actually "calls,"
"cries or "auctions" the property at an auction, recognizing
bidders and acknowledging the highest bidder. Commonly known
as
the auctioneer.
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Bid Rigging |
The unlawful practice whereby
two or more people agree not to bid against one another so
as to deflate value.
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Bidder Number |
The number issued to each person
who registers at an auction.
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Bidder Package |
The package of information and
instructions pertaining to the property to be sold at an
auction event obtained by prospective bidders at an auction.
Sometimes called a bidder packet or due diligence package.
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Bidder's Choice |
A method of sale whereby the
successful high bidder wins the right to choose a property
or properties from a grouping of similar or like-kind
properties. After the
high bidder's selection, the property is deleted from the
group, and the second round of bidding commences, with the
high bidder in round two choosing a property, which is then
deleted from the group and so on, until all properties are
sold.
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Bookkeeper or Clerk |
The person who is responsible
for the accounting and paperwork at an auction sale.
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Broker Participation |
An arrangement for third-party
brokers to register potential bidders for properties being
sold at auction for a commission paid by the owner of the
property or the auction firm.
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Buyer's Broker |
A real estate broker who
represents the buyer and, as the agent of the buyer, is
normally paid for his/her services by the buyer.
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Buyer's Premium |
An advertised percentage of the
high bid or flat fee added to the high bid to determine the
total contract price to be paid by the buyer.
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CAI |
Certified Auctioneers Institute.
The professional designation awarded to practicing
auctioneers who meet the experiential, educational and
ethical standards set by the Auction Marketing Institute,
Inc.
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Caravan Auctions |
A series of on site auctions
advertised through a common promotional campaign.
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Carrying Charges |
The costs involved in holding a
property which is intended to produce income (either by sale
or rent) but has not yet done so, i.e., insurance, taxes,
maintenance, management.
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Catalog or Brochure |
A publication advertising and
describing the property(ies) available for sale at public
auction, often including photographs, property descriptions,
and the terms and conditions of the sale.
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Caveat Emptor |
A Latin term meaning "let the
buyer beware." A legal maxim stating that the buyer takes
the risk regarding quality or condition of the property
purchased, unless protected by warranty.
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Certified Auctioneers Education
Institute, Inc. |
Now known as the Auction
Marketing Institute, Inc. See Auction Marketing Institute,
Inc.
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Clerk |
The person employed by the
principal auctioneer or auction firm to record what is sold
and to whom and for what price.
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Collusion |
The unlawful practice whereby
two or more people agree not to bid against one another so
as to deflate value or when the auctioneer accepts a
fictitious bid on behalf of the seller so as to manipulate
or inflate the price of the property.
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Commission |
The fee charged to the seller by
the auctioneer for providing services, usually a percentage
of the gross selling price of the property established by
contract (the listing agreement) prior to the auction.
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Conditions of Sale |
The legal terms that govern the
conduct of an auction, including acceptable methods of
payment, terms, buyer's premiums, possession, reserves and
any other limiting factors of an auction. Usually included
in published advertisements or announced by the auctioneer
prior to the start of the auction.
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Contract |
An agreement between two or more
persons or entities which creates or modifies a legal
relationship.
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Cooperating Broker |
A real estate broker who
registers a prospective buyer with the auction company, in
accordance with the terms and conditions for that auction.
The broker is paid a commission only if his prospect is the
high bidder and successfully closes on the property. Also
known as a participating broker.
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Critical Path |
Sequence of key tasks to be done
by auction contractor or other designated parties on
specified dates, leading to desired goals.
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Dual Agency |
The representation of opposing
principals (buyers and seller) at the same time.
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Due Diligence |
The process of gathering
information about the condition and legal status of assets
to be sold.
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Estate Sale |
The sale of property left by a
person at his or her death. An estate auction can involve
the sale of personal and/or real property.
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Groundsman |
See Bid Assistants.
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Hammer Price |
Price established by the last
bidder and acknowledged by the auctioneer before dropping
the hammer or gavel.
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Listing Agreement |
See Auction Listing Agreement.
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Listing Broker |
A real estate broker who has a
listing on a property and cooperates with the auction
company by allowing the auction agreement to supersede
his/her listing
agreement.
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Market Value |
The highest price in terms of
money which a property will bring in a competitive and open
market under all conditions requisite to a fair sale, the
buyer and seller,
each acting prudently, knowledgeably and assuming the price
is not affected by undue stimulus.
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Memorandum |
Sometimes also referred to as a
"Bidder Acknowledgment," or "Broker Acknowledgment," the
memorandum is signed by those parties either on the auction
floor or in the contract room.
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Minimum Bid Auction |
An auction in which the
auctioneer will accept bids at or above a disclosed price.
The minimum price is always stated in the brochure and
advertisements and is announced at the auctions.
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Minimum Opening Bid |
The lowest acceptable amount at
which the bidding must commence.
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Multi-Property Auction |
A group of properties offered
through a common promotional campaign. The properties to be
auctioned may be owned by one seller or multiple sellers.
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Multi-Seller Auction |
Properties owned by many
sellers, offered through a common promotional campaign are
auctioned in a single event.
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National Auctioneers Association |
An association of individual
auctioneers united to promote the mutual interests of its
members; formulate and maintain ethical standards for the
auction profession; promote the enactment of just and
reasonable laws, ordinances and regulations affecting
auction selling; make the public more aware of the
advantages of auction selling; and generally improve the
business conditions affecting the auction profession.
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National Real Estate Auction
Committee |
A national committee developed
by the National Association of REALTORŪs in April, 1990 to
provide education to members concerning real estate
auctions, identify issues and monitor, review and analyze
trends affecting the real estate auction industry. The
Committee was sunset in November, 1999. All auction
activities hosted by NAR now fall under the purview of the
Auction Forum.
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No-Sale Fee |
A charge paid by the owner of
property offered at a reserve auction when the property does
not sell.
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Opening Bid |
The first bid offered by a
bidder at an auction.
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On-site Auction |
An auction conducted on the
premises of the property being sold.
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Participating Broker |
See Cooperating Broker.
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Preview |
Specified date and time property
is available for prospective buyer viewing and audits. Also
known as Open House or Inspection.
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Referring Broker |
A real estate broker who does
not have a listing on a property, but refers the auction
company to a potential seller for an auction. Usually earns
a flat fee
commission for referring product to an auction company.
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Regroup |
A process used in real estate
auctions where a bidder has the opportunity to combine
several parcels of land previously selected by other
bidders, thereby creating one larger parcel out of several
smaller parcels. This process is often used in conjunction
with bidder's choice.
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Reserve |
The minimum price that a seller
is willing to accept for a property to be sold at auction.
Also known as the reserve price.
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Reserve Auction |
An auction in which the seller
reserves the right to establish a reserve price, to accept
or decline any and all bids or to withdraw the property at
any time prior to the announcement of the completion of the
sale by the auctioneer. See also Auction With Reserve. |
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Sale Manager |
The person designated by the
auction company who is responsible for organizing the
details of an auction. Also known as project manager.
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Sealed Bid |
A method of sale utilized where
confidential bids are submitted to be opened at a
predetermined place and time. Not a true auction in that it
does not allow for reaction from the competitive market
place.
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Seller |
Entity that has legal
possession, (ownership) of any interests, benefits or rights
inherent to the real or personal property.
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Subject to Confirmation |
See Reserve Auction.
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Tax Sale |
Public sale of property at
auction by governmental authority, due to nonpayment of
property taxes.
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Terms |
The period of time that an
agreement is in effect.
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Terms and Conditions |
The printed rules of the auction
and certain aspects of the Purchase & Sale Agreement that
are read and/or distributed to potential bidders prior to an
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Tie Bids |
When two or more bidders bid
exactly the same amount at the same time and must be
resolved by the auctioneer.
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Trustee's Sale |
A sale at auction by a trustee.
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Upset Price |
Commonly known as the reserve
price.
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Withdrawal
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Failure to reach the reserve
price or insufficient bidding.
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